3.40.8. Information Returns Processing

(1) Filers send paper income information returns to IRS to fulfill their filing requirement. IRS must convert these returns and source documents to electronic data records. Paper filed records failing the basic validation criteria to enter the generalized main frame (GMF) system as valid records fall to the Block Out of Balance (BOB) error registers instead of entering the processing run stream. Employees must correct documents failing basic validity, consistency or structure criteria before they can enter the automated run stream during electronic conversion.

(1) Authority for these procedures is found in title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code (IRC), IRC 6721, and corresponding Treasury regulations. The IRC is amended by acts, public laws, treasury determinations, rules, and regulations such as the following:

• The Housing and Economic Recovery Act of 2008

• American Recovery and Reinvestment Act of 2009

• Tax Increase Prevention Act of 2014

• Trade Preferences Extension Act of 2015

• Surface Transportation and Veterans Health Care Choice Improvement Act of 2015

• Hiring Incentives to Restore Employment (HIRE) Act

• The Protecting Americans from Tax Hikes (PATH) Act

• Emergency Economic Stabilization Act

• Hiring Incentives to Restore Employment Act

• Foreign Account Tax Compliance ACT (FATCA)

• Tax Cuts and Jobs Act of 2017

(1) The Director, SP, oversees the policies in this IRM and approves and authorizes the issuance of this Internal Management Document.

(2) The Operations Manager secures, assigns and provides training for the staff performing these tasks.

(3) The team manager assigns cases to employees, controls the workflow, and accurately records hours used and volume completed.

(4) The employee (clerk) applies the instruction in this IRM when working the paper error register.

(1) Program Reports: Consult IRM 3.40.37, Block Out of Balance Resolution - General Instructions, should be consulted for control of BOB error registers. The following lists error register reports the Service Centers uses to monitor and track the error inventory.

• GMF 09-44, IRP Block Out of Balance Register, generated daily if any data records BOB

• GMF 09-45, IRP Block Out of Balance ID List, generated daily if records exist

• Miscellaneous Inventory Report (MIR), (formerly known as the MISTLE Report) weekly report tracking aged cases for completion

• DED 01-40, Edit Block Proof List

• DED 01-42, DED01 Edit Controls

(2) Program Effectiveness: Management measures goals using standard documents processed per hour reports and by successful completion of the required amount of error data records prior to the program completion date stated in IRM 3.30.123, Work Planning and Control Processing Timeliness: Cycles, Criteria, and Critical Dates.

(3) Annual Review: Management reviews the processes included in this manual annually to ensure accuracy and promote consistent tax administration.

(1) Generalized mainline framework (GMF) is ran electronically each workday and creates the error register based on the presence of BOB error conditions that are present on the files entering income IRP mainline for the assigned site.

(2) Unit production cards (UPCs) will be dropped as frequent as daily or at least weekly to record activity in each functionality of this program.

(3) Use local reports to establish more information for supporting daily program control. Local reports do not replace the established official reports and required production reporting.

(1) The following will be terms and acronyms use throughout this instruction.

(1)

• General instructions found in IRM 3.40.37, Block Out of Balance Resolution - General Instructions, used as a basis when using this IRM.

• IRM’s are located on the Servicewide Electronic Research Program (SERP) at the following site: http://serp.enterprise.irs.gov/homepage.html

• Return storage and retrieval are referenced in IRM 3.40.37, Block Out of Balance Resolution - General Instructions

• Refer to IRM 3.24.162, ISRP System, Block out of Balance Transcription Instruction, when reviewing Form 6813, Block out of Balance (BOB) Correction Record

• Act in accordance with taxpayers rights by reviewing IRC 7803(a)(3), and the following site for more information about the Taxpayer Bill of Rights: https://www.irs.gov/taxpayer-bill-of-rights

• Edit tables, current and future processing year, are available on the Accounting and Deposit Section intranet SharePoint site. The site is located at https://organization.ds.irsnet.gov/sites/WICASSpSph/ATP/ATP%20Branch%20Shared% and supported by the Accounting and Tax Payment, Accounting and Deposit Section.

(1) IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2, Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards, and elevated through proper channels for executive approval.

(1) The correction procedures in this chapter cover the following form types:

• Form 1096, Annual Summary and Transmittal of U.S. Information Returns

  Note: Current and delinquent processed to the Payer Master File (PMF)

• Form 1097-BTC, Bond Tax Credit

• Form 1098, Mortgage Interest Statement

• Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes

• Form 1098-E, Student Loan Interest Statement

• Form 1098-F, Fines, Penalties, and Other Amounts

• Form 1098-Q, Qualifying Longevity Annuity Contract Information

• Form 1098-T, Tuition Statement

• Form 1099-A,Acquisition or Abandonment of Secured Property

• Form 1099-B, Proceeds From Broker and Barter Exchange Transactions

• Form 1099-C, Cancellation of Debt

• Form 1099-CAP, Changes in Corporate Control and Capital Structure

• Form 1099-DIV, Dividends and Distributions

• Form 1099-G, Certain Government Payments

• Form 1099-INT, Interest Income

• Form 1099-K, Payment Card and Third Party Network Transactions

• Form 1099-LS, Reportable Life Insurance Sale

• Form 1099-LTC, Long-Term Care and Accelerated Death Benefits

• Form 1099-MISC, Miscellaneous Income

• Form 1099-OID, Original Issue Discount

• Form 1099-PATR, Taxable Distributions Received From Cooperatives

• Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 & 530)

• Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc.

• Form 1099-S, Proceeds From Real Estate Transaction

• Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

• Form 1099-SB, Seller's Investment in Life Insurance Contract

• Form 3921, Exercise of a Qualified Incentive Stock Option Under Section 442(b)

• Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)

• Form 5498, IRA Contribution Information

• Form 5498-ESA, Coverdell ESA Contribution Information

• Form 5498-SA, HSA, Archer, or Medicare Advantage MSA Information

• Form W-2G, Certain Gambling Winnings

• Form 1041 Schedule K-1, Beneficiary's Share of Income, Deductions, Credits, etc.

• Form 1065 Schedule K-1, Partner's Share of Income, Deductions, Credits, etc.

• Form 1120S Schedule K-1, Shareholder's Share of Income, Deduction, Credits, etc.

(1) Use the following program codes to the type of return.

(1) Information Return Program (IRP) BOB registers are to be separated by program number. Within each program the registers are to be sorted by batch number and alpha block control number, with reBOBs listed first.

(2) Individual return sections only displays when the BOB code condition requires their presence.

1. The first two lines of each register (page) has systemic identification data. Included in these lines, the BOB sequence number and BOB codes.

2. The third line have block header information. Alpha field designators and error asterisks appear above the third line.

3. The fourth and succeeding lines have the individual document records and other identification data (i.e., mixed problem code indicator).

(1) BOB code "1" shows an Integrated Submission and Remittance Processing (ISRP) input document with an invalid section or out of sequence section or serial number, or block.

(2) BOB code "5" shows an invalid block header.

(1) BOB code "6" shows the format code for the first document in the block is invalid.

(2) BOB code "7" shows a discrepancy between the number of different payers in the transcribed block and the count of payers transcribed for the block header in Field I. BOB code "7" also appears if the payer ID section (section 16) is blank for the first document of the block except when the first document of the block is Form 1096, Annual Summary and Transmittal of U.S. Information Returns.

(1) BOB code "8" shows an invalid Account Type Code (ATC). The ATC is field G of the block header. The valid ATCs are "B", "C", "J", "P", "S", "T", and "Y".

(2) At least one document in the block must have a Foreign Country Code, in section 16, field I, if the ATC is "J" or "T". Otherwise, BOB code "8" is present. BOB code "8" is also present if all the documents in the block have foreign country codes and the ATC is "P" or "S".

1. Check the block header, Form 1332, Block and Selection Record, and the individual documents in the block to determine the correct ATC. Also, determine whether the foreign country Code(s) is transcribed correctly.

2. Make the necessary corrections to the block header MFT, block header ATC and section 16 of the individual document.

(1) BOB code "9" is assigned to a block of documents when the computer accumulated totals for document count fail to equal the corresponding total in the block header record. Take the following action:

1. The computer accumulated total prints on the Block Proof Total line of the block on the BOB listing.

2. No alpha field designators shows for the generated field. The differences between the computer accumulated total and the block header total is printed on the difference line on the block.

3. Examine the source documents and register to determine the correct count.

4. Use Action Code "6" to make necessary corrections to the block header.

5. Do not change the generated amount.

6. Correct field L of the block header record.

   Note: A SCCF adjustment is also required. Refer to IRM 3.40.37, Block Out of Balance Resolution, General Instructions.

(2) BOB code "M" is used for errors identified by the ISRP operator.

1. ISRP should attach a note indicating the input error.

2. Overlay mixed data sections using Action Code "3".

3. Enter Action Code "7" for the block header section when the entire block is correct.

4. Contact ISRP to determine why the operator entered a mixed data message if a note is not attached.

5. Correct with Action Code "7" if no problem is identified.

(1) BOB code "N" occurs when two or more blocks of original documents (i.e., the re-input source code is blank) is input on the same day with the same document locator number (DLN). The second and subsequent blocks appears on the BOB register with BOB code "N". For proper resolution:

1. Work the blocks together for proper resolution. The blocks should be consecutive on the BOB register unless they are from different master files.

2. Enter incorrectly transcribed block DLN on the register. Use Action Code "6" unless the transcription error has caused the format codes to be incorrect.

3. Enter Action Code "N", SCCF Adjustment Indicator "0", if the documents must be re-input.

4. Renumber all blocks except 1 if all document locator numbers DLN(s) is transcribed correctly.
   Check the SCCF Summary at the bottom of the record.
   The count and amount may be correct for only one of the blocks.
   Select the other blocks to be renumbered if any block is valid on the SCCF and no other BOB conditions exist.

5. Assign new DLN(s) to duplicate block(s). Refer to IRM 3.40.37, Block Out of Balance Resolution, General Instructions.
   Establish the new DLN(s) on the SCCF using Adjustment Code "00".
   Correct the new DLN(s) on the BOB register with Action Code "6" after the DLN(s) has established.
   Use Action Code "N", SCCF Adjustment Indicator "0", if a document format code change requires the block(s) to be re-input.

6. Select the block which requires the least amount of corrections when BOB code is present because an entire block of documents is transcribed twice.
   Delete the other block using Action Code "D", SCCF Adjustment Indicator "0".
   Use Action Code "7" to clear the block which is not deleted and does not require other corrections.

7. Do not assign BOB code "N" to blocks with blank re-input source codes and duplicate DLN(s) when BOB code "P" is already assigned.

(2) BOB code "P" occurs when the DLN is not on the SCCF or the proper control record to establish a block is not on the SCCF.

1. Coordinate all BOB code "P" blocks with the SCCF transcript function. A BOB Control Record (BCR) transcript coded No Record (NR) should be present.

2. Examine the block of documents to determine if the DLN is transcribed correctly.

3. Verify DED 01-40, Edit Block Proof List and DED 01-42, DED01 Edit Controls is input if the document is Account Type Code "S".

4. Check the Batch Transmittal, Form 2345, Batch Transmittal, to ensure that the same DLN is on both documents and no DLN(s) is deleted or changed since input.

5. Prepare Form 4028, Service Center Control File Adjustment Record (SCCF Format Code 216), if the DLN is correct on the documents. Refer to IRM 3.40.37, Block Out of Balance Resolution, General Instructions.

6. Ensure each SCCF adjustment is prepared only once. In some cases, the adjustment is already prepared by the person working the CRL or SCCF posting transcripts.

7. Release the block with Action Code "7" when SCCF action is completed.

8. Enter the proper DLN with Action Code "6", if the DLN on the register is transcribed incorrectly.

9. Renumber the documents if the DLN is invalid. Refer to IRM 3.40.37, Block Out of Balance Resolution, General Instructions.

10. Prepare a "00" SCCF adjustment. The block is normally re-input with Action Code "N".

(1) BOB code "Q" occurs when a block of original documents is processed for a SCCF DLN that has a document count of zero.

1. Examine the documents to determine the cause of the BOB condition.

2. Correct the re-input source code (field B) if transcribed in error.

3. The field should be blank for documents blocked by Form 1332, Block and Selection Record and "4" for reprocessable returns input with Form 3893, Re-Entry Document Control.

   Note: Other BOB codes may suggest the proper corrective action if the field is correct.

4. Check for transcription errors in other header fields, particularly the DLN.

5. Request help from the data control function. Data Control may be working a related posting transcript. Otherwise, a special SCCF transcript may resolve the problem.

6. Renumber the documents or adjust the SCCF as indicated.

(2) BOB code "R" occurs when the SCCF count, block header totals and block proof totals are inconsistent.

1. Follow correction procedures for BOB code "9" above.

2. Compare the SCCF count with the block header and block proof totals.

3. Prepare necessary SCCF adjustments.

(3) BOB code "S" identifies blocks for which more than one SCCF DLN key record or Master Control Record (MCR) is input for the same DLN.

1. Normally, at least one of the duplicate control records is input on the same day and would produce a SCCF posting transcript which should be worked at the same time by the data control function.

2. Contact Data Control and jointly determine which control record is correct. Data Control prepares the necessary SCCF adjustments.

3. Correct the BOB register when SCCF action is completed. Use Action Code "7" if no other BOB code(s) is present.

(1) BOB code "T" identifies a block for which the format code failed to match a master file system code or failed to match a valid DLN for the master file.

1. A program problem in the validity table is indicated if this code appears with no other BOB condition.

2. Report the problem to your supervisor for referral to the National Office.

3. Each condition should be resolved as the other conditions will be corrected if other BOB codes are present. If not, refer the problem to the National Office.

(2) BOB code "X" appears on a reBOB item in which the previous correction is incorrectly edited or transcribed.

1. Refer to the Invalid BOB Correction List which shows the complete input record and a literal indicating the reason for the invalid correction if more information is needed to determine the cause of the invalid correction.

2. The literals:
   No Match on File;
   Invalid Correction attempt; Incompatible SER # or Account Number (A/C);
   Invalid BOB Sequence Number;
   BOB Sequence Match but wrong type;
   No matching serial number; and Invalid Document add.

(1) The following table identifies the block header table fields and provides their description and uses.

(1) The following table identifies the BOB correction document sections. It also provides their description and required actions.